How Much Money Can I Make Trading Options?

http://optionalpha.com – Once you have a solid understand of where our “edge” is as traders we can back into how much money you can make trading options or what your targeted portfolio returns might look like for different capital allocations. Again, it’s no unreasonable to generate an above-average (Alpha) return on a small amount of your overall capital.

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– Kirk & The Option Alpha Team

Comments

Steve Lay says:

You say “margin” quite a few times. Margin to me is a loan from my broker so I can purchase a position. Being it is a loan, it comes with interest. If it’s margin that you withdraw from your account, I think I would understand your explanations better.  Very good video. Thank you

Eric McAlley says:

How are you quantifying your risk on each trade? How do I know what a 2% position is for example?

Thanks

David Lee says:

Some of the best options teaching I have seen!!! I love the math!!! I wish I saw this a year or two ago…always learning!!!

Winchu Lu says:

Kirk I love the videos but can you explain how if your shooting for 70% success and if you are risking $162 for a max profit of $40, can you tell me how that would be profitable if I run this same trade 10 times and win 7 times my profit would about $280(7x$40) but if I lose the other 3 it would be negative $486(3x$162), or are we taking into account a stop loss before we hit the max risk?

j4yd4wg1 says:

Hi Kirk, Question… if you have say a 100k account, and you’re investing 25k in options (per your example), is there a reason you need to leave 75k in cash in your investment account? I mean, stated another way, could you put that 75k into a home instead, and then what you actually have is 25k in your investment account with 100% invested in options… ?

Basically, I’m trying to see if there is a necessity to have 75k in cash in your account basically not earning anything (other than a small % interest from your broker).

Thanks. Love your videos! Likely joining soon.

andrzej magrys says:

Fantastic staff !

John Lake says:

Hello: Excellent Video, Question, what control IV, the market as a whole or the sector the stock is in ? Why is one stock at 46 IV and the other is at 70 IV, what controls this ?

Thanks,

van tri le says:

WOW!!! Thanks so much Kirk, this video is amazing!!! Thanks for all the tips and strategies 🙂 I have a question, which platform are you using or how can I find a free options chains with Probability ITM ? Mine doesn’t have that tool and I can’t find any on the web. Can you please share a link? Cheers!!!

Para Emprender says:

Just awesome

Hendranata Prasetyo says:

Hi, really good video, so if ther is a 100k account, and you invested 25%.. which is 25k.. is 25k is going to be used in margin in single trade? or 25k is the target premium you want to collect in 1 year? thank youu….

King Of Kings says:

Hello Kirk, I have a question on why you are taking the selling positions of the options.. what difference does it make? At first I thought it was because of the probability is higher but looking down the chart on the screen the probability is high. Maybe I am missing something..

mark says:

Is the price table that you show at 16:00 generated in Thinkorswim?

Thanks

Jeff Fairchild says:

You say that you ask people, do you want high profit or high roi…Shouldn’t you instead be asking them what is your brokerage fee for each trade? since really roi is what matters overall, you could figure out which would be a higher profit by comparing spread vs naked by including commissions, to get comparable roi’s.

Sam Heine says:

Great video guys, thanks so much.

lucci brisc says:

All i can say is WOW. You have truly cut the bull and just talked sense into me. I have been educating myself by watching videos and reading materials in this for past a year now. But this video alone is worth money. Thank You!!!!!!

Esman Gomez says:

I like how u explain the way you trade on these vids. Its very understandable. You have a teachers way about u. Started paper trading hope to progress.

Keiran Kainth says:

In this example how much would you have lost if the market did actually go below 102 (even though the probability was low that it would) – how much would have been lost?

Jon Ross says:

Hey Kirk, love the channel, love what you’re doing. I have a couple of questions. Not to poke holes into the analysis, but what about the effects of implied volatility when selling premium? How does that affect your win amount and win/loss percentage (especially in a low IV period)? Also, when you do take a loss, are you assuming a full loss for defined risk trades, and how do you include the loss from undefined risk trades such as selling naked puts, etc? Any insight on these questions would be great. Other than that, this is by far the best options channel I have found. Thanks again.

– Jon

Yunus Tasliel says:

Love the video! Just to make sure I get my math right. At 20:15 the annual return is displayed at 11.71%. When I pull out my calculator, 0.12% x 365 x 25% equals to 10.95%. Not a huge difference, what I’m really worried is if I did not understand the math 🙂 Would be great if you can elaborate and thank you for a great tutorial!

John Lake says:

Ok, what is the difference in Implied Volatility, and Volatility, do you ever use stochastics as an indicator !

Graham Jervis says:

Hi Kirk, is this in any of your pdf files on the website?

Melitus Aloysius says:

if i invest $5000 and my return will be 10% per year that is $500 per year.??? is it worth?

hopes26 says:

Thanks a lot for posting this

KhaiTri LacHong says:

Just wondering how you get to pay only 1.25 dollars per trade.

Kris Kringle says:

whats the reasoning behind only trading 25% of your account? If you have an 80% chance to win wouldn’t you make more money trading all of it? or is that remaining 75% what you have to put up for risk?

tracy alexander says:

Hello Kirk! I’m new to trading options just learning as much as I can before I get my feet wet! What platform or where do I go to see the big chart where you can search at the top left and it shows the put on the right and call on left shows the strike prices etc.

DrTed Lem says:

Quite nice. This is better than the mentors that I paid money for.

Kapur Shah says:

i have enjoy this video and i have learned quit a lot

Ray G says:

Hi Kirk, I have noticed that you can put on both legs of an iron condor with each leg at an 80% probability but when the legs are combined the overall probability is always less like 72%. Can you explain why?

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